European shares inch higher as travel stocks rebound

The German share price index DAX graph is pictured at the stock exchange in Frankfurt
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 15, 2021. REUTERS/Staff

July 16, 2021

By Sruthi Shankar

(Reuters) – European stocks rose on Friday as travel stocks rebounded after posting sharp losses this week, while a batch of upbeat earnings reports overshadowed concerns about rising cases of Delta variant in the continent.

The pan-European STOXX 600 index rose 0.1%. Still, the index was on course end the week flat to slightly lower.

Travel and leisure stocks gained 1.1%, with shares in UK’s Whitbread, Intercontinental Hotels and British-Airways owner IAG up almost 3%.

UK’s FTSE 100 and midcap stocks added 0.3% each ahead Britain’s lifting of all pandemic-led restrictions on Monday despite rising COVID-19 cases.

Aiding the travel and leisure sector, President Joe Biden said on Thursday the United States is reviewing when it can lift restrictions that ban most-non U.S. citizens from travelling to the United States from much of Europe.

Concerns about higher inflation and rising infections causing a slowdown in economic recovery have weighed on investors’ minds this week, driving many to the safety of bond markets and making it harder for record-high equities to build on gains.

“Markets have largely moved sideways this week, reflecting some cross-currents,” said Silvia Dall’Angelo, senior economist, at the international business of Federated Hermes.

“On one hand, a strong start to U.S. Q2 earnings season and dovish rhetoric from central banks continued to provide support. On the other hand, several factors have weighed on the outlook, including weaker activity data out of China, signs that growth and earnings have peaked…”.

Swedbank rose 2.5% after it reported a better-than-expected profit amid a booming mortgage market and record levels of commission income.

Cartier maker Richemont slipped 1.3% even as quarterly constant-currency sales more than doubled, lifted by a strong performance in the Americas from its jewellery brands.

UK luxury group Burberry and German sportswear company Puma also fell despite strong sales numbers.

Sweden’s Ericsson tumbled 8.5% after it reported second-quarter core earnings below market estimates, hit by a decline in sales in mainland China.

UK-listed miner Rio Tinto fell 1.6% after reporting a 12% fall in quarterly iron ore shipments after storms affected its West Australian operations.

Graphic: COVID-19 new daily cases – https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxlmjqpx/Pasted%20image%201626416076055.png

(Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V)